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Lake Connections for sale: County Board declares intent to sell broadband company

The Lake County Board of Commissioners unanimously declared its intent to sell the Lake Connections broadband network during it's meeting Tuesday. (File photo)

After seven years and millions of dollars spent, Lake County looks to be getting out of the broadband internet business.

The Lake County Board of Commissioners unanimously voted to declare its intent to sell Lake Connections, the county's broadband internet company, during its meeting Tuesday in Two Harbors.

The sale process will be a highly structured, collaborative process between the county and the U.S. Department of Agriculture's Rural Utilities Service (RUS), the lender that provided the majority of the funding for the network's construction. About 95 percent of the network's construction is complete, with just small sections in Fall Lake Township and around Ely left to be finished. The county will try to get the best bid possible to continue quality service to Lake Connections customers and those customers will not see a change in service or pricing through the process of the sale, according to a press release from the county.

"We know there is still work to be completed, however at this time we believe it is in Lake County's best interest to begin the process to evaluate selling the network to an established broadband network," Lake County administrator Matt Huddleston said in a statement. "We were able to build a state-of-the-art network that provides new opportunities to our businesses and residents at a time when nobody else would do so. We now have the opportunity to seek an owner that can provide the expertise in managing the network and make the necessary investments for the work that still needs to be completed."

Discussions about selling the network began during a May 11 meeting with RUS officials in Washington, D.C. and intensified during the board's strategy session May 30 in Two Harbors. All the board members said the only reason they took the steps they did to build the network, the largest rural broadband project in Minnesota and third largest in the nation, was because none of the existing broadband companies were willing to make the investment to bring broadband internet to the majority of Lake County.

"Seven years ago when we did get involved in this, it wasn't for the goal of owning a broadband network," Commissioner Rick Goutermont said during the meeting. "The reason we got involved was that none of the incumbents would go after these funds and none of the incumbents were looking to provide our constituents with the service that we felt they needed, that's why we got involved."

In 2010, the board received a $56 million loan and $10 million from RUS to construct the network and over three years more than 1,200 miles of a fiber network was built throughout Lake County and parts of eastern St. Louis County. Most of the network was completed in June 2015, and the focus shifted to connecting eligible customers to the network with the county pledging $15 million of its own money to fund "drops," or home connections, that also included a $3.5 million grant from the Federal Communications Commission. Now the county hopes to sell the network to a private company that will continue to invest in the infrastructure to complete the portions of the network in Fall Lake.

"We have it here, 95 percent of it is in the ground, there still needs to be some more funds put into it and with the roadblocks we've got in front of us for gathering more funds to put into it, I think this is the best way to make that happen," Goutermont said. "Get it into the private sector where they do not have to jump the hurdles and go through all the hoops for everything we want to do, they can just go out and do it and that includes putting more money into it and finishing the last five to 10 percent that we need to get done."

Commissioner Rich Sve echoed Goutermont and said the sale at this time provides a unique opportunity for collaboration between the county government and Lake Connections new owner.

"We have the opportunity to work with whoever will own this network in the future and the ability to aid the rest of the construction throughout our county so we get it all done," Sve said.

Commissioner Pete Walsh, who represents Fall Lake, also felt it was the right move at this time to sell the company.

"Of course, I'm not happy that Fall Lake is not completed, but hopefully, if things go forward the way they should, we can get service in there in the real near future," Walsh said.

The Lake Connections project encountered numerous hiccups during construction and even after. The county recently settled a lawsuit resulting from the construction of the network with Compass Consultants and another is still pending with Rohl Networks LP. After the main construction was completed in 2015 and even before, some residents faced long waits to have their homes connected to the network. Currently, there are more than 700 residents who have signed up for Lake Connections service but have not had their homes connected to the network.

Also at the meeting, the board voted for a second amended deferral of interest and principle of the RUS loan for three months, from June 1 to Aug. 31 and there will be an opportunity to extend the deferral if necessary. The county currently owes $48.5 million on the RUS loan.

As more counties around the state begin to build their own broadband networks, Sve said he has received a number of questions about the massive project and he said that he had no regrets.

"You can't understate what this has meant to residents of Lake County. This network got built and would never have been built in any other way, there was no entity that was willing to step up," Sve said. "One of the questions I get asked is would I do it again knowing now what I didn't know then. I said I'd love to do it again knowing then what I know now and I would. I would definitely do it again because it was the best thing for our citizens in Lake County."

Jamey Malcomb has been a reporter for the Pine Journal since October 2018. He previously worked as a reporter for the Lake County News-Chronicle from 2015-2018. Malcomb is a native of North Carolina and holds a bachelor's degree in English and history from the George Washington University and a master's degree in education from George Mason University in Fairfax, Va. Malcomb moved to Minnesota in July 2012 and worked as a sports clerk and news assistant at the Duluth News Tribune.